The Vehicle Tracking CEO’s job – it’s all about the sails [sic].
We live in turbulent times. Very many vehicle tracking companies are finding that the business models that they have relied upon for years are build on sand and work only in boom-time. Damage limitation is the key for so many today. So what are the problems faced by the CEO’s?
1) By far the biggest issue has been the ready availability of credit to lend to almost anyone. The lightness of the regulation and the pressure to meet/exceed targets by the finance houses has led to every shaky business being lent money to purchase a vehicle tracking system. Vehicle and asset tracking companies made hay whilst the sun shone and sold third party leases by the thousand. Pay nothing now but commit to ING or Shire Leasing for 3-5 years. Tracking companies took the whole lease value up front from the lender – and spent it. Post credit crunch, the finance houses have applied the brakes in no uncertain fashion and companies are now left with little new income from leases, no pot of money to dip into to self-finance and no way to pay their fixed costs. The lesson from this is simple – if you make hay whilst the sun shines then you had better store some away for when it rains. If you didn’t then you are done.
Now it is raining, the tracking companies are struggling at best and closing at worst. And their clients will be paying for years for their greed or short-sightedness. (Leases are payable regardless of the system working or not – ING an Shire lent only money not the system and are not responsible if your system no longer works).
2) Economic downturn. Whilst vehicle tracking and fleet management are, done properly, a way to save a large amount of money for a client company, it is often seen as an expense! Systems are sold on price rather than value. The perception is that all systems do basically the same things. The reality couldn’t be more different. Asset and vehicle tracking companies need to come out of the ‘double glazing’ mindset and establish clear benefits with a consultative approach, long term commitment from them and serious customer service. Until they do this, the ‘cost’ of the system will be the killer for the provider. Sell for nothing and you gain nothing.
3) Barriers to entry. The market is busier than ever. Almost anyone thinks that they can make money from tracking these days. But sound businesses are not built on shaky foundations. The companies established over 7 years ago that are still around are still there for a reason. Very many have fallen by the wayside in the interim. Those that have prospered and grown have done so through sound business models (public companies excluded as the evidence is completely the reverse). The bottom end of the market is flooded and the participants drowning. Barriers to entry used to be the very technology which has now become mainstream. But they are re-establishing themselves now. Advances in technology offer added benefits to clients and the long term winners are embracing the new technologies to offer new features and benefits. Selling on price is the way to destruction, the smart companies are moving to selling on value and the worthwhile customers look for value.
So what is the CEO’s job throughout all this?
CEO’s of tracking companies need many skills to cover all areas of the business. Their job is to steer the ship through the choppy waters of change. Set the sails right and they sweep ahead of the flotsam and jetsam that sells basic systems on price. Set them wrong and they sink in the melee.